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Canada Kills Carbon Tax, Gas Prices Expected to Plummet

March 16,2025


POLITICS

The new Canadian Prime Minister, Mark Carney, has officially scrapped the 
consumer carbon tax, fulfilling a key campaign promise just hours after being 
sworn into office.

Carney, an influential banker who once ran the Bank of England, announced the 
decision during his first cabinet meeting on Friday, signing an order-in-
council to eliminate the federal fuel charge immediately.

"This is a cabinet that's focused on action," Carney said. "It's focused on 
getting more money in the pockets of Canadians, it's focused on building this 
economy with all the tools that we have here."

"We will be eliminating the Canada fuel charge, the consumer fuel charge, 
immediately. Immediately, " he added.

The carbon tax, which was set to increase from $80 to $95 per ton on April 1, 
had been widely criticized for driving up costs for consumers without 
delivering meaningful environmental benefits. Carney had pledged to shift the 
burden to industrial emitters instead, maintaining a tax on major businesses 
while easing costs for households.

Immediate Impact on Canadians

Canadians who have been receiving rebates under the carbon tax program will 
still get their next quarterly payment before the end of April, Carney 
confirmed.

"This will make a difference to hard-pressed Canadians, but it is part of a 
much bigger set of measures that this government is taking to ensure that we 
fight against climate change, that our companies are competitive, and the 
country moves forward, " he said.

The announcement was met with applause from Carney's cabinet, many of whom 
had initially supported the 2018 legislation that introduced the tax. The 
move signals a major shift for the Liberals as they attempt to address 
affordability concerns ahead of the next federal election.

Political Reaction

The decision has drawn sharp reactions across the political spectrum. 
Conservative Leader Pierre Poilievre, who has made repealing the carbon tax a 
central part of his platform, accused Carney of political opportunism.

"Carbon Tax Carney is pausing the carbon tax until after the election when he 
no longer needs your vote but still needs your money, " Poilievre wrote on 
social media, arguing that Carney had only changed his stance for electoral 
gain.

Ontario Premier Doug Ford welcomed the decision, calling the tax "the worst 
ever, " while Saskatchewan Premier Scott Moe urged Carney to act swiftly in 
fully dismantling the measure.

British Columbia Premier David Eby also confirmed his government would follow 
suit, pledging to remove the provincial consumer carbon tax now that the 
federal mandate had been lifted.

"Our commitment was once the federal government removed the backstop that 
required us to have it, we would get rid of it too, and that work is well 
underway, " Eby said.

While households will see relief, industrial emitters remain subject to 
carbon pricing. Federal Agriculture Minister Kody Blois supported the move, 
calling it a necessary step given the widespread opposition to the tax.

Broader Implications in US-Canada Trade War
Carney's decision to eliminate the consumer carbon tax comes as Canada faces 
escalating trade tensions with the United States. A series of tariffs and 
retaliatory measures between the two countries have heightened economic 
uncertainty, particularly in the energy sector. U.S. restrictions on Canadian 
exports, including oil and natural gas, could drive up domestic fuel prices 
despite the tax repeal, limiting the immediate relief Canadians might expect 
at the pump.

Energy analysts warn that while the removal of the carbon tax may ease some 
financial pressure on consumers, ongoing trade disputes with Washington could 
offset those savings by increasing costs for imported fuel and disrupting 
supply chains. The oil and gas industry, which remains a key driver of the 
Canadian economy, has been caught in the crossfire of these tensions, adding 
another layer of complexity to Carney's policy shift.

The consumer carbon tax's elimination is expected to lower fuel costs by 10-
15%, though its economic impact remains to be seen. With an election looming, 
the carbon tax debate is set to remain a central issue in the national 
conversation.

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